Cause Marketing may decrease charitable giving

This is really really interesting research by Aradhna Krishna. So many organisations (corporate and charities) want to engage in Cause Marketing. We are all told how it boosts sales, 76% of consumers are more likely to buy if the brand is associated to a cause etc..etc..

But perhaps its the wrong model? Are companies making real donations, or in kind, and what is the knock on effect of this new research? I don’t have the answer, but this is certainly food for thought for people in all sectors. I expect we will hear a lot more about this.

Results from a pilot field study and two laboratory studies show that consumers’ direct charitable giving to a charity is lower if they purchase on CM (cause marketing) even if the cause marketing purchase is costless to the consumer (unlike other forms of charitable giving).

This suggests that even if CM purchases are costless, consumers think of their purchase as a charitable act and decrease subsequent charitable acts. This is corroborated by the fact that in both laboratory studies, the higher the cause marketing expenditure, the lower the individual charitable giving, indicating that people may mentally assign their CM expenditure as their charitable giving. Consumers may even think of the firm’s donation as theirs since it is facilitated by their act — in fact, this type of thinking is “rational” since it allows consumers to spend less to meet their donation goals.

The premise that cause marketing will always increases total money raised for the cause is shown not to hold in our studies. We find that instead of increasing total contribution to the cause, the presence of CM can decrease it. It needs to be noted, that whether total donation increases or decreases with CM depends on firm contribution. We have merely challenged the belief that total donation always benefits with CM, with the objective of making consumers and public policy officials think a little before embracing CM at every opportunity.

This is especially important given the number of highly opaque CM campaigns that are run – for instance, many do not report what portion of proceeds are given to the cause, some have limits on their donation and keep the excess monies raised (e.g., the notorious Yoplait campaign – see Boston Globe, October 4, 2009), some report the donation as a part of unreported profits.

CM purchasing substituting for charitable giving is also consistent with people choosing the less costly altruistic option. However, the laboratory studies show that the less 18 empathetic altruism option of CM purchase chosen by consumers leads to lower contentment.

It is as if people know intrinsically when they have done selfless charitable acts. The egoistic nature of cause marketing purchases is evidenced in open-ended responses focused on selfutility, or selfish reasons. It is also seen as being more selfish and less empathetic in thirdparty ratings of “purchasing and donating behavior” as being more caring, helpful and sacrificing. Our results are in line with work showing happiness to be a function of donation amount. However, our research adds another dimension to research linking charitable giving and happiness — selfish versus selfless altruism can have different effects on happiness.

 

The paper goes to point out that there are many limitations to the research. And suggestions for future research. But still this is a challenging piece. You can read the full paper here